Is Wisconsin Becoming a Low- Wage Economy? Employment Growth in Low, Middle, and High Wage Occupations:

Transcription

1 Is Wisconsin Becoming a Low- Wage Economy? Employment Growth in Low, Middle, and High Wage Occupations: by: Marc V. Levine University of Wisconsin- Milwaukee Center for Economic Development CED Data Brief October 2014

2 Stagnant wages and deepening inequality have become central concerns across the United States. 1 Academic studies have shown for some time now that labor market polarization --the so-called hollowing out of middle skill (and middle wage) jobs accompanied by employment growth at the lower and upper ends of the skills and wage spectrums has been occurring nationally for over thirty years. 2 Since 2000, however, as research by M.I.T. economist David H. Autor has revealed, there has been not only continuing erosion in the number of middle-wage jobs, but also a marked deceleration in high-skill, high-wage employment growth, and a proliferation of low-wage jobs. Consequently, writes Autor, the national labor market has increasingly resembled a downward ramp since 2000, with low-wage employment growth dominating the job creation process. 3 In addition, as numerous recent reports have documented, the post economic bounce-back from the Great Recession has been a low-wage recovery. During the recession, one study concluded, employment losses occurred throughout the economy, but were concentrated in mid-wage occupations. By contrast, during the recovery, employment gains have been concentrated in lower-wage occupations. 4 Real median earnings have been stagnant, at best and the economy increasingly faces a good jobs deficit. 5 This brief provides some basic data on the extent to which employment growth in Wisconsin over the past decade been concentrated in low-wage occupations. As the following charts and tables show, there has been a marked increase in the share of Wisconsin employment in low-wage occupations since 2000, with a significant acceleration in the growth of jobs in low-wage occupations during the post-recession recovery period of The number of jobs in middle-wage occupations has contracted consistently over the past decade (especially during the Great Recession), while jobs in high-wage occupations, after increasing between , have declined steadily since Using data on the median wages of occupations in the Bureau of Labor Statistics Occupational Employment Statistics (OES), we calculate the number of Wisconsin jobs in occupations paying low, middle, and high wage levels, in 2000, 2007, 2010, and 2013 (the most recent year for which OES data is available). For the purposes of this report, we categorize the wage levels of occupations in the following ways: 1) Low-wage 2

3 occupations, where the median hourly wage is below $12.50; 2) Middle-wage occupations, where the median hourly wage is between $12.51 and $24.99; and 3) Highwage occupations, where the median hourly wage is over $ (See Appendix 1 for more on the data and methods used here). Tables 1 and 2 show the employment trends in low-wage, middle-wage, and highwage occupations in Wisconsin during three periods: the growth cycle; the deep contraction between during the Great Recession; and the post-2010 recovery. Employment growth in Wisconsin between was marked by the polarized pattern identified by David Autor and others nationally: jobs increases in low and high wage occupations, shrinking employment in middle wage occupations. During the recession employment in Wisconsin declined across all wage levels, although the losses were heavily concentrated in occupations paying middle wages (90 percent of the job losses in Wisconsin were in middle-wage occupations). Finally, between , employment continued to decline in both middle and high wage occupations in Wisconsin; all of the net job growth between occurred in low wage occupations. More troubling still: over 60 percent of the growth of employment in low-wage occupations in Wisconsin occurred in very low-wage occupations those with median hourly wages below $10.00 (in inflation-adjusted 2013 dollars). This marked a continuation of the decade-long trend: between , the number of Wisconsinites working in very low-wage occupations grew from 234,450 to 405,780, an increase of 73 percent (see Table 3 below, as well as Appendix 2). Wage Category Table 1: Numeric Change in Employment by Wage Category Wisconsin: Jobs in Low Wage Occupations +55,050-6, ,680 Jobs in Middle Wage Occupations -35, ,330-16,220 Jobs in High Wage Occupations +69,960-7,080-19,450 Jobs in All Occupations +89, , ,010 Source: BLS, Occupational Employment Statistics, 2000, 2007, 2010,

4 Table 2: Percentage Change in Employment by Wage Category Wisconsin: Wage Category Jobs in Low Wage Occupations +8.5% -0.9% +18.7% Jobs in Middle Wage Occupations -2.5% -9.0% -1.3% Jobs in High Wage Occupations +11.4% -1.0% -2.9% Jobs in All Occupations +3.4% -4.9% +3.6% Source: BLS, Occupational Employment Statistics, 2000, 2007, 2010, 2013 Table 3: Employment Growth in Very Low-Wage Occupations In Wisconsin: Employment Change in Occupations Paying Median Hourly Wages Under $10.00 (in 2013 constant dollars) Wage Category Numeric Growth: Jobs in Very Low Wage Occupations Percentage Growth: Jobs in Very Low-Wage Occupations , , , % +5.6% +26.2% As a result of these trends, the distribution of employment by the wage level of Wisconsin occupations changed significantly between 2000 and As Chart 1 below shows, occupations paying middle wages accounted for 52.4 percent of Wisconsin jobs in 2000; by 2013, that share had declined to 45.7 percent. On the other hand, the share of total employment in low-wage occupations rose from 24.5 percent in 2000 to 30.7 percent in The shift between 2010 and 2013 is particularly striking. In 2010, about the same percentage of Wisconsinites (around 26 percent) were employed in high-wage occupations (over $25.00 median hourly wage in inflation adjusted dollars) and low-wage occupations (under $12.50 median hourly wage). By 2013, as Chart 1 graphically illustrates, the share of Wisconsin employment in low-wage occupations was more than 6 percentage points greater than the percentage of workers in high-wage occupations. In short, although employment in low-wage occupations has grown consistently in Wisconsin since 2000, it has especially surged since Chart 2 and Tables 4 and 5 show why. First and rather obviously employment in historically low-wage 4

5 occupations has grown much more rapidly than overall employment growth in Wisconsin. The proliferation of low-wage work in Wisconsin since 2010 has been fueled by rapid growth in occupations such as personal care and home health care aides; food preparation and serving; entertainment services (such as ushers or gaming dealers); child care providers; and retail salespersons. Almost all of these occupations report median hourly wages around $10.00 or less. Chart 1: Distribution of Employment By Median Hourly Wage of Occupations In Wisconsin: High 23.2 Low 24.5 High 25.1 Low 25.6 Middle 52.4 Middle High 26.1 Low 26.8 High 24.3 Low 30.7 Middle 47.2 Middle

6 Chart 2: Employment Growth in Selected Lower-Wage Occupations In Wisconsin: All Jobs $16.32 Fast food cooks $8.54 Personal and home care aides $10.26 Child care workers $9.64 Dining room and cafeteria attendants $8.57 Retail salespersons $9.78 Food preparation workers $9.18 Waiters and waitresses $ % employment growth, Source: BLS, OES, 2010,

7 Table 4: Employment Growth in Selected Lower-Wage Occupations In Wisconsin: Occupation 2013 Median Hourly Wage Numeric Employment Growth % Employment Change Fast Food Cooks $8.54 2, Gaming Dealers $ Dining Room Attendants $8.57 1, Waiters and Waitresses $8.66 2, Ushers and Lobby Attendants $ Food Preparation Workers $ Short Order Cooks $ Child Care Workers $9.64 2, Retail Salespersons $9.78 4, Personal and Home Health Care Aides $ , Counter and Rental Clerks $ , All Occupations $ , Source: BLS, OES, 2010, 2013 Table 5: Selected Middle-Wage Occupations That Became Low-Wage Occupations in Wisconsin Between (all wages in inflation-adjusted 2013 dollars) Occupation 2010 Median Hourly Wage 2013 Median Hourly Wage Total Employment 2013 Assemblers and Fabricators (other) $15.44 $ ,840 Laborers and Freight/Stock/Materials Movers $13.03 $ ,520 Helpers- Installation, Maintenance, Repair $13.00 $ ,500 Helpers- Production Workers $12.86 $ ,240 Nursing Assistants $12.82 $ ,240 Food Cooking Machine Operators $12.78 $ ,120 Landscaping and Groundskeeping $12.63 $ ,950 Driver/Sales Workers $12.60 $ ,150 Source: BLS, OES, 2010,

8 Second, however, the surging employment in historically low-wage occupations in Wisconsin is only part of the story. There has also been considerable downward pressure on wages in occupations that have historically offered middle-wage median hourly pay, in effect turning many middle-wage occupations into low-wage occupations and thereby adding to the pool of low-wage employment. Consequently, as Table 5 suggests, an important share of Wisconsin s employment growth in low-wage occupations and concomitant decline in middle-wage employment between 2010 and 2013 stemmed from real wage declines in formerly middle-wage occupations, transforming them into lowwage occupations. Several occupations that were middle-wage in such as laborers and freight, stock, and materials movers; nursing assistants; and driver/sales workers-- all saw their inflation-adjusted median hourly wages drop below $12.50 by 2013, thus adding thousands to the low-wage segment of the Wisconsin labor market. Moreover, perhaps as ominously, even in many occupations that remained middlewage, especially in manufacturing, real wages fell noticeably between 2010 and The inflation-adjusted median hourly wage for production occupations in Wisconsin fell by 5.2 percent between Even in occupations like welders or CNC machine tool operators, supposedly in such high demand that employers claim there is a skills gap in Wisconsin, real wages fell by 6.5 percent and 4.7 percent respectively between 2010 and While the median hourly pay in these occupations remained solidly in the middle-wage category through 2013, ranging between $15 and $18 an hour, the downward trend in real wages suggests a pervasive, continuing erosion of the middle-tier of Wisconsin s occupational wage structure. Indeed, as Table 6 suggests, if the projections for future job growth in Wisconsin by the state s Department of Workforce Development (DWD) are correct, the transformation of Wisconsin into a low-wage economy is likely to continue unless there are changes in labor market institutions or public policies. Of the 15 occupations projected by DWD to generate the most openings through employment growth (as opposed to replacements) between 2010 and 2020, ten paid median hourly wages in the low-wage tier (under $12.50) and, of those, six paid median hourly wages around or under $10.00 a very low-wage threshold. If the goal of economic development is to create family-supporting 8

9 jobs, recent trends and future projections provide little evidence that Wisconsin is moving in the right direction. Table 6: 15 Occupations in Wisconsin With Most Projected Job Growth : Occupation Projected Growth Openings Median Hourly Wage $ Food Preparation/Serving 61,400 76,760 15, Registered Nurses 57,760 71,540 13, Personal/ Home Care Aides 31,130 42,600 11, Truck Drivers 45,460 54,950 9, Office Clerks 70,190 79,480 9, Waiters and Waitresses 43,340 51,920 8, Retail Salespersons 75,930 84,260 8, Customer Service Reps 49,930 57,690 7, Nursing aides 37,980 44,270 6, Laborers/ Movers 47,800 53,210 5, Bartenders 28,070 33,250 5, Janitors and Cleaners 47,240 51,710 4, Landscaping/Groundskeeping 21,440 25,880 4, Restaurant Cooks 16,170 20,180 4, Medical Secretaries 13,670 17,630 3, Source: State of Wisconsin, Department of Workforce Development 9

10 Appendix 1 The analysis in this paper is based on data provided annually by the Bureau of Labor Statistics, Occupational Employment Statistics (OES) on median wages and employment by occupation, for all states and metropolitan areas in the United States. (Access at: The OES provides data, for May of each year, on employment and wage levels in major occupational groups as well as detailed occupations; the May 2013 OES release, for example, included wage and employment data for 756 detailed occupations in Wisconsin. For each year in this analysis 2000, 2007, 2010, and 2013 we divided Wisconsin s detailed occupations into three categories: 1) Low-wage occupations (paying median hourly wages of less than $12.50 in 2013 inflation-adjusted dollars); 2) Middle-wage occupations (paying median hourly wages between $12.51 and $24.99); and High-wage occupations (paying median hourly wages over $25.00). Although any wage classification is somewhat arbitrary, this one makes sense both intuitively and statistically: in 2000, for example, the three wage tiers distributed in a bell-shape (approximately 25% of total employment in both low-wage and high-wage occupations; 50% in middle-wage occupations). As Wisconsin employment has grown more rapidly in low-wage occupations since 2000, that distribution has obviously begun skewing downward, as Chart 1 in the data brief clearly shows. For the analysis each year, we aggregated employment in all of the detailed OES occupations falling into each wage category. Thus, for any given year, the tabulation employment in low-wage occupations represents the aggregate employment of all occupations with a median hourly wage less than $12.50 (in 2013 dollars); the same calculation was performed for jobs in middle-wage and high-wage occupations. We then compared the aggregate employment for each wage tier of occupations in 2000, 2007, 2010, and 2013, yielding the analysis and conclusions in the data brief. This analysis is not the same as identifying the precise wage level of every worker in each occupation the OES data do not cleanly permit that kind of calculation. But this breakdown does nevertheless convey the extent to which the occupational mix in the state, and employment in those occupations, is trending towards low, middle, or high wage jobs. 10

11 Appendix 2 As we point out in this paper (p. 3-4), Wisconsin s recent employment growth has been concentrated not merely in low-wage occupations, but in very low-wage occupations (those paying a median hourly wage under $10.00). The table below shows this concentration by breaking down the low-wage category of Table 1 into two groups: 1) employment in very low-wage occupations (under $10.00/hour); and 2) employment in remaining low-wage occupations (those paying between median hourly wages between $10.01 and $12.50). As this table illustrates, it is the under $10.00/hour occupations that have dominated Wisconsin s employment growth since 2000, and especially during the Great Recession and in the post-2010 recovery period. This reality has important implications for a host of policy issues, not the least of which is whether the state s minimum wage should be increased. As a response to the proliferation of very low-wage jobs, several communities in Wisconsin have scheduled advisory ballot measures in the November 4, 2014 elections on whether the state should raise the minimum wage from $7.25 to $10.10 an hour. 6 On the other hand, Governor Scott Walker stated that he doesn t think the minimum wage serves a purpose, in part because he wants to create jobs that pay two or three times the minimum wage. 7 The data, however, show that since Walker took office, Wisconsin s relatively slow pace of job creation 8 has been dominated by growth in very low-wage occupations, an indication that raising the minimum wage would make a difference for thousands of Wisconsin wage earners. Employment Change by Wage Category in Wisconsin: Wage Category Emp Change Emp Change Emp Change Jobs in Very Low Wage Occupations (Under +69, , ,360 $10/hr) Jobs in Remaining Low Wage Occupations -14,770-23, ,320 (Between $10.01-$12.50/hr) Jobs in Middle Wage Occupations -35, ,330-16,220 Jobs in High Wage Occupations +69,960-7,080-19,450 Jobs in All Occupations +89, , ,010 11

12 Endnotes 1 The New York Times, Raising the Minimum Wage, City by City, 11 October Accessed at: 2 See, for example, David Autor, The Polarization of Job Opportunities in the U.S. Labor Market, (Washington, D.C.: Center for American Progress, April 2010). Accessed at: See also: John Schmitt and Janelle Jones, Bad Jobs on the Rise, Center for Economic Policy Research (September 2012). Accessed at: 3 David Autor, Polanyi s Paradox and the Shape of Employment Growth, (Paper presented at Federal Reserve Bank pf Kansas City economic policy symposium, August 2014), p. 19. Accessed at: 4 See National Employment Law Project, The Low-Wage Recovery and Growing Inequality, (August 2012). Accessed at: See also: National Employment Law Project, The Low-Wage Recovery: Industry Employment and Wages Four Years Into the Recovery, (April 2014). Accessed at: Recovery-Industry-Employment-Wages-2014-Report.pdf?nocdn=1; and Innovation Ohio, Ohio s Low- Wage Recovery, (August 2014). Accessed at: 5 National Employment Law Project, The Low-Wage Recovery and Growing Inequality, p Georgia Pabst, Minimum wage hike among issues up for referendum votes in Milwaukee County, The Milwaukee Journal Sentinel, 19 October Daniel Bice, Scott Walker says he doesn t believe minimum wage serves a purpose, The Milwaukee Journal Sentinel, 14 October On the slow pace of job creation under the Walker Administration, see: Marc V. Levine, Nine Charts on Recent Trends in Employment Growth in Wisconsin, (UWM Center for Economic Development Data Brief, September 2014). Accessed at: and Marc V. Levine, Gauging Employment Growth in Wisconsin: State-By-State Comparisons, (UWM Center for Economic Development Data Brief, March 2014), p Accessed at: 12